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3G v/s WiFi – Impending war between telcos and ISPs?

This announcement by Lenovo to include Cingular’s 3G implementation with its notebooks throws up some interesting questions. Right now, 3G only supports data transfer speeds of about 400-700kbps, and it is primarily used in high-end mobile smartphones. However, as this standard evolves, and it is able to support transfer speeds in Mbps, it’ll begin to compete with WiFi itself.

What that means is that telecom companies will find it more and more attractive to offer internet services through 3G, and not limit it to mobile subscribers. In fact, if a company such as Airtel (a major telecom company in India) were to start offering an “Airtel 3G connection” to virtually anyone who was willing to pay for internet access, it could end up becoming an ISP in itself. That’s where the competition heats up.

It’d be a cinch for Airtel to start offering wide-range wireless Internet services, for three reasons:
1.) Airtel could utilise its existing towers/current mobile infrastructure.
2.) Even if a separate parallel infrastructure were to be set up, the maintenance cost of a wireless network would be extremely low, even though the up-front investment would probably be higher when compared to cable.
3.) Existing subscribers could become ready-made, at-your-doorstep customers for Airtel. They could have an “Airtel account”, and access the internet either from their mobile phone, or their desktop/laptop, once they get a 3G network card.
4.) ISPs have already sunk in a huge amount of money into their wired network infrastructure, and would be loathe to cast that aside and setup a fresh wireless network.

What could go wrong?
1.) Simple – 3G fails to live up to its hype, cannot support high-enough data speeds.
2.) The vast majority of mobile phones begin to offer WiFi. In that case, it would be the ISPs who could start offering voice services, in addition to data, instead of the other way round.

Which way we go will depend on who builds better relationships with device manufacturers. The tipping point, in my opinion, will be mobile devices. Whoever (a telco or an ISP), does a better job of convincing mobile handset manufacturers to build 3G/WiFi into their most significant models, and then offering the best access plan.

We are now taking the first baby steps towards True Unification – the convergence of mobile devices (phones/consumer electronics) and notebooks/desktops. Whether the underlying infrastructure is going to be WiFi ( 802.11b/g/n) or 3G (WCDMA/EDGE), remains to be seen. Again, in any case, the real winners will be those companies which offer the best “unified” product-services. Google Talk is the prime contender at this moment.


January 18, 2006 ·  Post to Twitter ·  Email this ·  Internet, Policy, Predictions, Telecom ·  Leave a Comment


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